Crypto market update: Tether (USDT) not backed 100% by dollar reserves
|- Tether has always raised questions whether its fiat reserves are enough to back the 1.9 million tokens.
- USDT is fully backed, the backing is not 100% fiat but includes other fiat equivalents.
One of the largest stablecoins in the market Tether (USDT) has finally admitted that it may not be fully backed by fiat. The new development comes after the Tether amended its earlier claims regarding the assets that are guaranteeing the value of the digital currency.
Tether has published a new update on its website that details that the dollar-backed token USDT is currently not backed by 100% fiat reserves. The statement reckons that while USDT is fully backed, the backing is not 100% fiat but includes other fiat equivalents.
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).
However, according to Internet Archive, the company had stated around mid-February that USDT is fully backed by fiat:
“Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.”
Tether has always raised questions whether its fiat reserves are enough to back the 1.9 million tokens that currently in circulation. A report that was published sometime back claimed that the asset is indeed fully backed by dollar reserves. According to CoinDesk:
“Bloomberg News reported that it has seen Tether bank statements indicating that, over four separate months at least, the company held sufficient dollars to back the USDT tokens on the market.”
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